Deutsche Bank and Brexit worries unnerve invetsors
U.S. stocks closed lower on Monday, 03 October 2016 as concerns over Deutsche Bank's financial condition and the U.K.'s plan for exiting the European Union outweighed stronger-than-expected manufacturing data. Traders also assessed that a report on U.S. manufacturing activity, which showed a shift back into expansion territory, might have heightened concerns that the Federal Reserve might raise interest rates sooner rather than later.
The Dow Jones Industrial Average declined 54.30 points, or 0.3%, to 18,253.85, while the Nasdaq Composite Index closed 11.13 points, or 0.2%, lower at 5,300.87. The S&P 500 index fell 7.07 points, or 0.3%, to 2,161.20.
Declines were led by heavy losses in utilities and real estate shares, which are sensitive to a change in interest rates. Eight sectors settled in the red with financials, consumer staples, utilities and real estate acting as the largest laggards.
Equity indices began the day under pressure as a mixed performance from European bourses weighed on the broader market. Shares of Deutsche Bank continued to be in focus after the German lender failed to confirm whether or not it had reached a revised settlement with the U.S. Department of Justice.
The ICE Dollar Index, a measure of the U.S. currency against a basket of other major currencies, climbed on Monday, up 0.2%. The buck got an additional boost as U.K. Prime Minister Theresa May indicated she would pursue a clear break from the European Union by the end of March. That fueled a sharp drop in the British pound versus the dollar.
The British pound took a hit from news that the U.K. aimed for a clear break from the European Union and data on U.S. manufacturing was somewhat upbeat, helping to support the greenbackweighing on prices for gold, which is traded in the dollar.
Today's economic data at wall Street was limited to August Construction Spending and the September ISM Index. The ISM Manufacturing Index for September checked in at 51.5 (consensus 50.4). The September reading was better than expected and up from 49.4 in August. The dividing line between expansion and contraction for this measure of national manufacturing activity is 50.0.
Separately, total construction spending declined 0.7% in August (consensus +0.2%) following a downwardly revised 0.3% decline (from 0.0%) for July. On a year-over-year basis, total construction spending is down 0.3%.
A fairly busy U.S. economic lineup this week could trigger renewed metals market attention on interest rate prospects. The much-anticipated monthly U.S. employment report due at the end of the week.
Crude oil futures settled at a multiweek high on Monday, 03 October 2016 after a volatile session which saw prices switch between gains and losses as traders assessed last week's preliminary production agreement by OPEC and it's potential to curb the global glut.
November West Texas Intermediate crude rose 57 cents, or 1.2%, to settle at $48.81 a barrel on the New York Mercantile Exchange, after touching lows under $48 and highs above $49. WTI Prices saw a gain of roughly 7.9% last month and a third-quarter decline of nearly 0.2%.
Bullion prices ended substantially lower at Comex on Monday, 03 October 2016. Gold futures finished at their lowest level in more than two weeks on Monday, with prices posting their fourth loss in five sessions on the back of a stronger U.S. dollar.
December gold fell by $4.40, or 0.3%, to settle at $1,312.70 an ounce. Silver for December delivery lost 34.6 cents, or 1.8%, to $18.868 an ounce; Silver gained roughly 3.2% last quarter.
Treasuries finished near their worst levels as yields rose through the curve. The yield on the 2-yr note increased three basis points (0.90%) while the yield on the benchmark 10-yr note rose two basis points (1.62%).
Today's participation was below the recent average as fewer than 800 million shares changed hands on the NYSE floor.
There is no economic data of note scheduled to be released tomorrow.
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